Brooklyn-Based Bitcoin Startup BitInstant Raises Seed Round

Brooklyn-based BitInstant, a startup that provides temporary credit in order to make Bitcoin transactions faster, has raised an undisclosed sum of seed funding from an angel investor. “We sold 15 percent of our company to Roger Ver, CEO of MemoryDealers, which is probably the largest used computer parts site on the West Coast,” co-founder Charlie Shrem told Betabeat by Gchat.* “He bought in for an undisclosed sum and is now our director of marketing and Asian operations, as he’s based in Tokyo.”

The original plan was to have three or four investors, but Mr. Ver offered in full and wanted to be on the team, Mr. Shrem said. “An offer I could not refuse!”

Mr. Shrem hired a programmer and a designer with the investment.

BitInstant has processed more than half a million dollars in transactions since launching in the beginning of September. Bitcoin transactions were taking days to weeks to process on the exchanges. BitInstant verifies a deposit and then fronts the credit to both parties so users can deposit money into their accounts immediately–hopefully in seconds, BitInstant says, but at most, within 30 minutes. It currently serves the two major Bitcoin exchanges Tradehill and Mt. Gox.

In addition to fundraising, Mr. Shrem, whose background is in ecommerce, and Gareth Nelson, the project’s U.K.-based tech lead, have been pushing updates including, but not limited to, an API. That new innovation alone should inspire some interesting projects in the fast-iterating Bitcoin world.

BitInstant also now allows USD deposits into Mt. Gox, realtime updates on your order status, new payment methods including Dwolla, Liberty Reserve and Paxum (“with a record time of 11 seconds from payment on the hub page to payment into Tradehill account,” BitInstant notes). And soon—maybe even this week—BitInstant will offer cash deposits at five major banks, instant PayPal withdrawals and will start serving Virwox.com and CryptoXchange.com.

*Mr. Ver writes in to clarify. “I’m far far far away from being the ‘largest used computer parts site on the West Coast.’ But I likely am the largest dealer of used optical transceivers on the West Coast.”